Consumer Confidence Dips to 12-Year Low: Strategic Case for Defensive Stock Allocation

Economic uncertainty is reshaping investment priorities. Consumer confidence has dips to concerning levels as Americans grapple with labor market pressures and persistent inflation. This shift in economic sentiment creates both challenges and opportunities—particularly for investors seeking to protect portfolios during volatile market periods. The environment suggests a tactical rotation toward lower-risk, income-generating equities becomes increasingly relevant.

Understanding the Economic Backdrop

Recent data from The Conference Board revealed consumer confidence reached 84.5 in early 2025, representing a significant decline from prior months and marking the weakest reading in over a decade. The slide reflects deteriorating employment expectations, with only 23.9% of respondents describing jobs as “plentiful”—the lowest share since early 2021. Simultaneously, 20.8% reported jobs were “hard to find,” the highest proportion in the same timeframe.

The labor market’s softening trajectory began in mid-2025, with unemployment holding steady around 4.4% in late 2024, yet forward-looking indicators suggest further weakness may emerge. Policy uncertainty surrounding trade and immigration, combined with businesses reassessing workforce needs amid artificial intelligence adoption, has created hesitation in hiring decisions. The Federal Reserve’s decision to hold rates unchanged during its January meeting underscores the difficult balance between inflation control and economic growth support.

Why Low-Beta, Dividend-Focused Equities Matter Now

As consumer confidence dips further, market volatility typically accelerates. Defensive-oriented investors traditionally turn to stocks exhibiting three key characteristics:

• Lower market sensitivity: Stocks with beta values below 1.0 experience smaller price swings during broader market downturns
• Reliable income streams: Higher dividend yields provide returns independent of price appreciation
• Defensive sector exposure: Utility, healthcare, and consumer staples companies maintain stable demand during economic slowdowns

The Zacks Investment Research team identified four candidates meeting these criteria, each carrying a Zacks Rank of #1 (Strong Buy) or #2 (Buy). These equities represent a structured approach to weathering uncertainty while maintaining modest yield potential.

Four Defensive Stocks Positioned for Downside Protection

Ameren Corporation (AEE): Utility Stability and Growth

Ameren provides electricity and natural gas distribution across Missouri and Illinois, serving approximately 2.4 million electric customers and over 900,000 natural gas accounts. The company’s current-year earnings growth expectation stands at 8.2%, with consensus estimates improving slightly over the past two months. Trading with a beta of 0.57 and offering a 2.75% dividend yield, AEE carries a Zacks Rank #2. The relatively low beta and utility sector exposure make this stock particularly suited for investors prioritizing capital preservation.

Fortis, Inc. (FTS): North American Utility Diversification

Fortis operates as a regulated utility provider with electric and gas assets spanning Canada, the United States, and the Caribbean. The company additionally engages in non-regulated hydroelectric operations, providing diversified revenue streams. Current-year earnings growth projections reach 5.4%, with consensus estimates rising 1.6% over the past 60 days. Fortis exhibits a 0.50 beta and 3.42% dividend yield, carrying a Zacks Rank #2. Its geographic and operational diversity reinforces its defensive positioning.

Cardinal Health, Inc. (CAH): Healthcare Services Scale

As one of the world’s largest healthcare services and products providers, Cardinal Health maintains operations across pharmaceutical distribution, medical products, and specialty solutions. The company serves approximately 90% of U.S. hospitals and processes over 43,000 daily pharmaceutical shipments. Cardinal Health projects current-year earnings growth of 21.5%—the highest among the four recommendations—with consensus estimates improving 1.5% recently. The healthcare sector’s defensive characteristics combine with Cardinal’s operational scale. CAH trades with a 0.64 beta and 0.95% dividend yield, holding a Zacks Rank #2.

J&J Snack Foods Corp. (JJSF): Consumer Staples Through Convenience

J&J Snack Foods manufactures and distributes branded snack products and frozen beverages through both foodservice and retail channels. The company’s portfolio includes recognized brands such as SUPERPRETZEL, ICEE, SLUSH PUPPIE, and MINUTE MAID frozen offerings. Expected current-year earnings growth reaches 4.5%, with consensus estimates showing modest 0.2% improvement. Trading at a 0.34 beta—the lowest among the four stocks—and yielding 3.37% in dividends, JJSF carries a Zacks Rank #2. Its consumer staples orientation aligns with defensive positioning during economic softness.

Strategy Summary: Timing and Execution

The convergence of dips in consumer confidence, labor market uncertainty, and elevated geopolitical tensions creates an environment favoring lower-volatility, income-generating equities. The four stocks above combine reduced systematic risk (low beta), meaningful dividend income, and positive earnings momentum within defensive-oriented sectors.

Investors implementing this strategy should treat these recommendations as components of a broader portfolio rebalancing toward risk mitigation. The approach acknowledges that periods of uncertainty, while uncomfortable, often present attractive entry points for long-term, income-focused investors seeking meaningful yield with reduced downside exposure.